Using 1031 to Keep Your Options Open

According to Marc Lowlicht, CEO and Certified Financial Planner ™ at Opes Private Wealth Management in East Hampton NY,

Marc suggests adding the IRS 1031 Exchange language into your next LLC operating agreement when creating a JV or a Structure Real Estate Development Deal on certain investment real estate projects. (Please consult you attorney and tax advisor on this)

A 1031 Exchange is defined as the exchange of certain types of property or commercial real estate. that allow the investor(s) to defer the recognition of capital gains or losses due upon sale, and hence defer any capital gains taxes otherwise due.

Adding the 1031 Exchange option into the operating agreement before and not after allows the partners the flexibility to re-invest without the burden of a hidden tax liability in the event of a quick cash sale. (consult your tax advisor)

Inserting the language inside the LLC Operating agreement prepares the partners for the option before and not after it’s too late and avoiding a “should have/ would have” situation.

For more questions about the IRS 1031 Exchange, (If you want to add in here your Tax or legal profession or)feel free to contact Marc Lowlicht at The OPES Private Wealth Management office at 631.324.6570.

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